October 7, 2014 | Written by: Bob Fox
Categorized: Cloud Computing
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Changes driven by market, regulatory, and economic megatrends in the information and communications technology (ICT) industry expose new opportunities for CSPs. As industry value chains are disrupted, one megatrend is IT as a service. A two-sided business delivery model can enable CSPs to capitalize on the IT as a service trend.
By 2020, the majority (60%) of IT business will be based on the two-sided delivery model. CSPs can operate on both sides of this model. On one side, for example, consumers demand a new range of wireless services which keep them connected and empowered. Enterprises, enjoying quick growth in the scope and quality of services they offer, need hosted, pay as you go network platform services to handle increased volume. The resulting rapid expansion of smart devices and data transactions on wireless networks will put a tremendous load on existing macro networks.
In the growing as-a-service world, CSPs will carry massive data loads for enterprise as traffic outstrips spectrum. Some CSPs already provide new network services, including policy and security features, on heterogeneous networks (HetNets). HetNets leverage lower-cost integrated small cell networks by adding technologies like WiFi and WiMAX to traditional over-the-air networks.
On the other side of the two-sided model, CSPs use partners—rather than doing it all themselves—to develop and deliver the technology for new high value and growth services to customers. Advances in areas such as open APIs, software defined environments and virtualization will enable global adoption of novel technologies developed by hundreds, if not thousands, of independent developers. This can drive huge new revenue opportunities for CSPs and deliver extended service offerings for customers, without costly capital and personnel investment.
We see three growth plays that help position CSPs to grow as-a-service revenue:
1. Accelerate the shift to higher value services.
2. Stake out a leadership role in the new ICT services ecosystem.
3. Create an imperative to develop and acquire IP in key industry verticals, such as government, education, health care and the like.
Employing a two-sided business model of scale can help CSPs advance these plays by exploiting new technologies and business models.
We don’t agree with the predictions that claim future growth rates for CSPs will be weak. But there is a significant gap between CSP 2020 aspirations and performance in the enterprise market. If the objectives are to improve customer experience, open new revenue sources and reduce costs, then the two-sided business model delivers on those goals. Tune in again later to read about other high value CSP growth plays for today.
Note: Bob Fox will be speaking at the Dreamforce event in San Francisco, on October 14th at 4:30PM. His topic is “Industry in Transition: Telecom in 2014 – IBM’s Point of View for Communications Service Providers.” Learn more about IBM participation at Dreamforce: http://bit.ly/IBMDreamForce